Cost of Living: Energy and Housing

Caroline Flint Excerpts

Thursday 5th June 2014 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

The Government’s record is simple: since they came to power, working people have seen their pay fall by £1,600 a year on average, and by the end of this Parliament, people will be worse off than at the beginning. That is a record that no other Government can match, but it is not one to be proud of. The averages and statistics provide only a glimpse of what is happening to families caught in the cost of living crisis. It is a crisis that runs deep into people’s lives and deep into our country, because something fundamental has happened. The link between the wealth of our nation and everyday family finances has been broken, so the single biggest challenge facing our country is to restore that link so that growing prosperity is shared by all and not just a few at the top. On that challenge, this Queen’s Speech falls badly short. Today, I want to set out why it fails, and how Labour would take immediate action to deal with the pressures facing families and make the big long-term changes that we need so that hard-working people are better off.

Let us start with energy. There were suggestions yesterday that communities would be given the right to purchase a stake in local renewable energy projects, which was one of the community energy ideas in “The Power Book” which we published back in 2012. If that is what the Government are announcing, we welcome it and we look forward to more information on how and when it will apply.

We also heard that, subject to their consultation, the Government intend to bring forward legislation to give oil and gas developers underground access rights without requiring landowner permission. We have always been clear that provided it can be done in a safe and environmentally sustainable way, we will support shale gas exploration, but we have set out six conditions which we believe need to be met, four of which the Government have agreed to. That leaves two—first, an assessment of groundwater methane levels, and secondly, ensuring that all this monitoring is done for a full 12 months before any drilling can proceed, so as to ensure that we have robust baseline measurements to which we can always refer back. That is one of the lessons we need to take on board from the American experience, which did not go as well there.

As the Secretary of State mentioned, the changes to underground access rights announced in the Queen’s Speech will put shale gas on the same footing as other industries such as coal, water and sewage, so we will not oppose them, but we will continue to push for the environmental framework to be strengthened, and for assurances that the responsibility for clean-up costs and liability for any untoward consequences rests fairly and squarely with the industry, not with taxpayers or homeowners.

However, as the Secretary of State knows, companies have only exploratory licences, so full shale gas production is still some years away. Even if it does happen, unless we see significant shale production not just in Britain but right across of Europe, most experts believe it will have little effect on gas prices in the UK. The idea that it will in any way help with the cost of living that people are facing in relation to energy prices is therefore pretty wide of the mark.

One would not know it from the Secretary of State’s complacent speech, but in real terms energy bills have risen three times faster under this Government than under the previous one. The average family’s energy bill is now £300 a year higher than it was back in 2010, and businesses say energy is the second biggest cost they face. The consequences are being felt around the country. Figures out this week show that more than 1.5 million households are in debt to their supplier—saddled with more than £1 billion-worth of debt. If the Government had published their annual fuel poverty statistics last month, as I believe they were meant to, I imagine we would see the fuel poverty gap—the gap between people’s bills and what they can afford—increasing too. Perhaps the Secretary of State could enlighten us today on whether that is the case and explain why these statistics were not published.

On Tuesday we learned that in the past year alone the profit margins of the big six energy companies from supplying gas and electricity have doubled, so what is there in the Queen’s Speech to help bill payers? What is there to stop companies exploiting their customers? Nothing. The Secretary of State spoke about the Government’s dodgy deal with the energy companies, which he claimed had cut the average bill by £50, but let me remind the House of a few things that he forgot to mention. He forgot to say that because the energy companies increased bills by, on average, £110 at the same time as cutting green levies, the average family’s bill is still more than £60 higher than last year. He forgot to say that 3.7 million households on fixed price deals will not even receive the full saving, even though the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) said it was “not acceptable” for the energy companies to fail to pass it on.

The Secretary of State forgot to say how the Government cobbled this deal together—a £5 cut in network charges, to be repaid in full next year, with interest; £12 from the warm home discount moved from people’s bills to their taxes, and somewhere between £30 and £40 of cuts to vulnerable and hard-to-treat households, which should have got help with energy efficiency and insulation through the energy company obligation. That amounts to 440,000 fewer households getting help to make their homes warmer. These are the people who have been made to pay, not the energy companies.

Then we heard the Secretary of State wax lyrical about the impending market investigation by the Competition and Markets Authority. I have been clear that we support the market investigation. I have also said that the review should cover the role of the regulator too, because one cannot properly investigate a market without looking at how it is regulated. The very fact that Ofgem has deemed it necessary to refer this industry to the competition authorities is an admission that the market is not working for consumers. Yet the review will take 18 months to complete and has not even been given the go-ahead yet. The test for the Government was what they would do to help households and businesses in the meantime, and on that test this Queen’s Speech fails.

I can tell the House exactly what we would do if this were Labour’s Queen’s Speech. We would protect households from any more unfair price hikes by freezing energy bills for 20 months. That would stop suppliers increasing their prices, but of course they would still be able to cut them. We would also begin the work of reforming the market. Consumers will not thank us if we use the CMA investigation as an excuse to avoid dealing with problems we can fix now. For instance, one of the biggest barriers to proper competition in this market, and one of the main reasons people find it difficult to trust the industry, is that companies can generate power and sell it from one arm of the business to another, at prices that are never disclosed, before finally selling it on to the public.

We could fix that problem quite straightforwardly by introducing a ring fence between the generation and retail arms of energy companies. We are not talking about companies being forced to divest bits of their business, although of course that may be something for the CMA to consider; we are simply talking about the way in which these companies operate becoming transparent. In fact, some suppliers already claim to operate in such a way. SSE has said, following the publication of Labour’s Green Paper on energy market reform, that it will legally separate its generation and retail businesses. So why wait? The CMA might report back with additional measures that need to be implemented, but if there are things we can do now to make this market work for the public and restore trust, then we should do them.

[Huw Irranca-Davies]

I commend my right hon. Friend for laying out the measures that would have been in an alternative Labour Queen’s Speech. Will she confirm that another measure would have dealt with the one in five or one in six people who are in rural off-grid households and who currently have no protection? One of the greatest measures we could have brought forward would be to allow those people to have their winter fuel payment paid early, so that they have the flexibility to buy at times of the year when the prices for off-grid oil, and so on, are much cheaper.

[Caroline Flint]

I absolutely agree with my hon. Friend. I commend the fantastic work he is doing with rural communities the length and breadth of Britain and thank him for the support he has given my team in addressing some of the issues facing households who are off the grid. As he says, for those off the grid this is an equally disappointing Queen’s Speech. There is nothing on bringing forward winter fuel payments, which would allow people to buy their heating oil when it is cheaper, or on bringing those who are off-grid under the energy regulator so that they can enjoy some of the protections that everybody else would enjoy. Labour would have put both those measures in a Queen’s Speech.

[Mr Mike Weir (Angus) (SNP)]

I am pleased that Labour has now supported early winter fuel payments, for which I have been pushing for some time. Does the right hon. Lady recognise that one of the other problems is that the energy company obligation does not include off-grid boilers? Would Labour be prepared to push forward a measure on that? [Interruption.]

[Caroline Flint]

I am hearing from different parts of the House that the ECO does and does not allow it. Clearly, we must have an energy efficiency and insulation programme that meets the needs of various communities in the different circumstances in which they find themselves. With my hon. Friend the Member for Ogmore (Huw Irranca-Davies), I am working through a number of proposals and listening to communities about what would work. I am also listening to those working in the sector, as well as those who supply oil and gas and those who want to see what they can do to help more with energy and insulation. We are looking into this in greater detail.

That leads me to my next point. In the long term, the most sustainable way to cut people’s energy bills is to improve the energy efficiency and insulation of our housing stock. Despite the progress made under the previous Government, who helped more than 2 million households through Warm Front and millions more through the decent homes programme, Britain still has some of the least energy-efficient housing stock anywhere in Europe. Some 80% of our stock today will still be around in 2050, and this Government’s green deal, which I remind the House was billed as the biggest home improvements programme since world war two, has been an abject failure. Just 2,500 households have signed up for a green deal package. To put that figure in context, it is only slightly more than the number of Liberal Democrat councillors left after the party’s collapse in the local elections a couple of weeks ago, including on Kingston council in the Secretary of State’s area.

We have a big enough challenge bringing our existing stock up to scratch without having to worry about retrofitting the housing we are building now. That is why, when in government, Labour set a target that every new home built in Britain would have to be built to, or as near as possible to, a zero-carbon standard by 2016. In this Queen’s Speech, however, we have the bizarre but not uncommon spectacle of the Liberal Democrats trying to claim credit for a policy that was actually introduced seven years ago and which they have undermined. That is exactly what they are doing: taking our zero-carbon homes policy, exempting developments of up to 50 homes, watering down the standards for larger developers, and then wanting credit for it. Whatever the short-term benefits, in the long term there is a real risk that these decisions will leave consumers stuck with homes that are not meeting the high standards of energy efficiency. Given the scale of the challenge we already face, that is a problem we could well afford to do without.

On housing more generally, the country is suffering from the biggest housing crisis in a generation: house building is at its lowest peacetime level since the 1920s; affordable home starts are down by a third since the election; and home ownership is falling further and further out of reach for young families. As a result, more and more people are having to rely on renting a home in the private sector, but the cost of renting has gone up, rising more than twice as fast as wages since the election, despite the prediction of the former Housing Minister and, if reports are to be believed, the soon-to-be former chair of the Conservative party, the right hon. Member for Welwyn Hatfield (Grant Shapps), who reassured us that rents would not go up. But they have gone up, and renters are getting a bad deal and are being forced to pay all kinds of unfair charges and fees.

Nothing is being done to provide the certainties that families need to plan for their future. What does this Queen’s speech have to offer them? Nothing. All we have is Help to Buy. Of course, any help for first-time buyers struggling to get on the property ladder is welcome, but why is a scheme that is meant to help first-time buyers allowing for taxpayer-based mortgages for homes worth up to £600,000? How many first-time buyers can afford homes worth £600,000? As more and more voices are warning, unless rising demand for housing is matched with rising supply, house prices will inflate even further, making home ownership even less affordable for those on lower-middle incomes.

As my right hon. Friend the Member for Leeds Central (Hilary Benn) will set out in his speech later, if this were Labour’s Queen’s Speech, we know what we would do to get Britain building again, help people get on the housing ladder and give people who rent more security. We would get 200,000 homes built a year by 2020. We would unlock the supply of new homes by giving local authorities “use it or lose it” powers and boost the role of small house builders. We would legislate to make longer-term tenancies with predictable rents the norm and properly regulate letting agencies.

Like energy, water is another essential to life, but more than 2 million households are forced to spend more than 5% of their income on their water bills. At the moment, the water companies can choose whether or not to offer a social tariff to those customers who struggle the most. As a result, only three companies do so, and fewer than 25,000 households receive any help at all. That is just not good enough. If this were our Queen’s Speech, my hon. Friend the Member for Garston and Halewood (Maria Eagle) would use powers to establish a national affordability scheme, funded by the water companies, to ensure that help gets to those who need it and to put an end to the current postcode lottery.

As well as dealing with the problems that hold back our country, we should be making big, long-term changes to our economy so that we can grow and earn our way to a higher standard of living. Work should pay and people should always be better off in work than out of it. One reason it does not always feel like that is the rising cost of child care. As my hon. Friend the Member for Manchester Central (Lucy Powell) has highlighted, since the election the cost of a nursery place has risen five times faster than pay. There are 578 fewer Sure Start centres, and 35,000 fewer child care places. However, the Government’s new child care allowance will not even start until well after the next election. If this was our Queen’s Speech, we would expand free child care from 15 to 25 hours for working parents of three and four-year-olds to make work pay, and we would create a legal guarantee of access to wraparound child care for primary school children through their school from 8 am to 6 pm.

As my hon. Friends the Members for Streatham (Mr Umunna) and for Leeds West (Rachel Reeves) will set out next week, there is so much more that the Government could and should have done in the Queen’s Speech. Let us take zero-hours contracts. We welcome the fact that the Government have adopted our policy of banning exclusivity clauses, but that is only one part of the problem. What about people working regular hours for month after month, or even for years, who are still on zero-hours contracts? This Queen’s Speech does not help them. What about strengthening the national minimum wage, tax breaks for firms that boost pay through the living wage, job guarantees for the young and long-term unemployed, or help for small businesses by cutting business rates and reforming the banks? That is the sort of Queen’s Speech that our country needs.

I am afraid that what we got yesterday was a series of half-baked measures, re-announcements and policies brought in to solve problems this Government created in the first place. Why was it necessary to include a Bill to deal with the problem of people leaving one part of the public sector with huge pay-offs only to be re-employed in another part? Let us be honest about this. It is because of the thousands of people who have done exactly that since the Government’s reorganisation of the NHS. Let us remember, when they talk about getting the banks to lend to small businesses, to ask why they are dealing with this problem only in the fifth year of this Government.

Perhaps we should not be surprised that the Government have fallen short. While family budgets were being squeezed throughout the country, the Government were in denial; from this Queen’s Speech, we can see that they still are. They crow about a recovery, but as the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke) said on Monday, ordinary people have not yet felt any sense of recovery. I agree: a recovery that does not benefit ordinary working people is no recovery at all, and the promise of Britain—that the next generation should do better than the last—is being broken.

The test of any Queen’s Speech is whether it deals with the challenges the country faces today and sets the foundation for our country to be stronger and more prosperous for the future. On both those counts, this Queen’s Speech fails. In 11 months’ time, the country will face a choice between a Britain where a few at the top do well and everyone else is left to take their chances, where people are working harder for longer for less, and where the powerful play by one set of rules and the rest of us live by a different one; and Labour’s vision of a Britain with fair play at its heart, where businesses pay their taxes, do not exploit migrant labour and have an apprenticeship scheme alongside any workers they bring in from abroad, where there are fair rules for things such as welfare, selling energy or coming into our country, where there are fair rewards for a country in which hard work pays, responsibility is rewarded and everyone shares in its success, and where there are fair chances for a country in which people do not have to be born into privilege to get on or to have a secure roof over their head and their life chances are not defined by the postcode in which they were born. That is Labour’s vision for Britain.